In April the Union Cabinet approved Rs 41,534 crore of nutrient-based subsidy (NBS) for phosphatic and potassic (P&K) fertilisers for kharif 2026, the April–September season, 12% more than a year earlier. The subsidy per kilogram of phosphate rose to Rs 52.76 and of nitrogen to Rs 47.32, so a tonne of di-ammonium phosphate (DAP), India’s most used phosphate fertiliser, now carries Rs 32,787 of subsidy. The retail price of DAP has stayed at Rs 1,350 a 50 kg bag.

This blog has covered India’s $18 billion fertiliser import bill and why fertiliser prices barely reach wholesale inflation. This piece works out what the new rates mean per tonne: how much of the cost of imported DAP the farmer, the subsidy and the importer each bear, and how that has changed over three seasons.

The rates, season by season

The government pays a fixed amount for each kilogram of nitrogen, phosphate, potash and sulphur in a fertiliser, so a grade’s subsidy follows from its nutrient content. DAP is 18% nitrogen and 46% phosphate; at kharif 2026 rates that is Rs 32,787 a tonne. The same formula gives the published Rs 27,800 for kharif 2025 and Rs 29,805 for rabi 2025-26. Potash has been held at Rs 2.38 a kilogram throughout, so muriate of potash (MOP) gets only Rs 1,428 a tonne.

Imported DAP earns less than it costs

An importer of DAP receives two things for a tonne: Rs 27,000 from the farmer at the fixed retail price, and the subsidy. In kharif 2026 that is Rs 59,787. Indian Potash Limited bought about 1.35 million tonnes in May at $930–935 a tonne, when the rupee was around 96 to the dollar: about Rs 89,520 a tonne, before port charges, bagging, inland freight and interest. The shortfall is about Rs 29,733 a tonne. Of the import cost, the farmer pays about 30%, the subsidy covers 37%, and about 33% is not covered.

The subsidy rose, but the import price and the rupee rose faster. Subsidy plus retail price covers imported DAP only up to about $623 a tonne, and that break-even has barely moved across the three seasons ($637, $640, $623), while the market moved from about $700 to more than $930. In rabi 2025-26, when DAP fell to around $700, the shortfall was about Rs 5,640; by kharif 2026 it was more than five times that. The Fertiliser Association of India asked for the kharif rates to be revised, citing raw-material prices up 100–200% after the West Asia conflict.

Who bears the shortfall is not published. Importers and domestic makers who use imported phosphoric acid and rock can carry cheaper earlier stock, run down margins, cut imports, or wait for a special package like the Rs 3,500 a tonne the government paid on DAP in 2024-25. Any of these shows up somewhere: in company results, in a later supplementary subsidy, or in supply. DAP imports in April–December 2025 were 5.95 million tonnes, up from 4.13 million a year earlier, and stocks in March 2026 were well above the pro-rata requirement.

Potash and the budget

MOP is the other large import. India’s new contract with Belarusian Potash Company in May was $383 a tonne, up from $349 a year earlier. At about Rs 96 to the dollar that is Rs 36,768 a tonne. MOP’s retail price is formally decontrolled; at the Rs 1,534 a bag reported in a December 2024 parliamentary answer, retail price plus subsidy falls about Rs 4,660 a tonne short, a much smaller gap than DAP’s.

The budget is the other pressure point. The provisional NBS allocation for 2026-27 was about Rs 54,000 crore; the kharif season alone has committed Rs 41,534 crore of it, about 77%. In 2025-26 the NBS allocation was raised 22.5% above its provisional figure during the year; at current import prices a similar revision looks likely.

What would fix this

• The Department of Fertilizers should publish, each season, the import price and exchange rate it assumed when setting NBS rates, so the gap between assumed and actual cost is visible.
• NBS rates should be revised automatically within a season when the landed price of DAP moves by more than a set margin, instead of through ad hoc special packages.
• The government should publish quarterly import volumes, landed prices and subsidy paid per tonne for DAP and MOP, as this blog proposed earlier, so the shortfall and who bears it can be measured.
• If the retail price of DAP is to stay fixed, the budget should say so and provide for the subsidy that implies at current prices, rather than revising the allocation mid-year.

These are proposals from this blog, not recommendations any agency has adopted.

What this piece could not establish

The Cabinet’s kharif 2026 rates were read from press reports, not the notification; the per-tonne DAP figure is this blog’s arithmetic from those rates, checked against the published figures for the two previous seasons. Import prices are single reference points per season and the exchange rates are approximate, so the shortfalls are indicative. The comparison treats the full Rs 1,350 retail price as the importer’s revenue, although it includes GST and the dealer’s margin, and it leaves out port, bagging, freight and interest costs; both make the real shortfall larger. Whether a special package was paid on DAP in 2026 was not found. The MOP retail price is from 2024 and may have changed.

Sources and caveats

About this article: Researched, written and edited by Umashankar Triplicane Dwarakanathan, with AI research assistance; every figure is meant to trace to the primary source cited. See the Editorial Policy for how sourcing, AI use and corrections work.